Maintenance Function's Performance Evaluation Using Adapted Balanced Scorecard Model

Download as pdf or txt
Download as pdf or txt
You are on page 1of 5

World Academy of Science, Engineering and Technology

International Journal of Industrial and Manufacturing Engineering


Vol:3, No:10, 2009

Maintenance Function’s Performance Evaluation


Using Adapted Balanced Scorecard Model
A. Bakhtiar1, B. Purwanggono1, N. Metasari1
1
Department of Industrial Engineering, Diponegoro University, Semarang, Indonesia
(arfbakh@yahoo.com)

significant part in company’s total operating costs. It is


Abstract—PT XYZ is a bottled drinking water company. better not to consider maintenance activity as a cost center
To preserve production resources owned by the company so that activity, but it is better for the company to consider it as
the resources could be utilized well, it has implemented an activity that could give profit for the company in the
maintenance management system, which has important role in
long term.
company’s profitability, and is one of the factors influenced
overall company’s performance. Yet, up to now the company
The maintenance activity in this company is held by
has never measured maintenance activities’ contribution to Engineering Department by allocating maintenance crews
International Science Index, Industrial and Manufacturing Engineering Vol:3, No:10, 2009 waset.org/Publication/4804

company’s performance. in each section of production department. These crews are


Performance evaluation is done according to adapted responsible for the availability of production machines in
Balanced Scorecard model fitted to maintenance function their section. For all this time, the company has never
context. This model includes six perspectives: innovation and measured the efficiency of maintenance activity held by
growth, production, maintenance, environment, costumer, and engineering department, whether it is optimum or not, so
finance. Actual performance measurement is done through that it can lessen company’s operation and maintenance
Analytic Hierarchy Process and Objective Matrix.
cost, and also improve the efficiency of resources used for
From the research done, we can conclude that the
company’s maintenance function is categorized in moderate
this activity.
performance. But, there are some indicators which has high By using maintenance performance measurement, we
priority but low performance, which are: costumers’ complain will know what factors caused the low efficiency of recent
rate, work lateness rate, and Return on Investment. performance, and also what factors could be improved in
order to improve company’s maintenance performance.
Keywords—maintenance, performance, Balanced Besides, performance measurement is also a way for the
Scorecard, Objective Matrix management to evaluate the condition of its system and
make a decision related to maintenance policy adapted by
the company. From above explanation, it is so important
I. INTRODUCTION to measure the performance of maintenance activities in
this company, and to recommend a performance
PT XYZ, as one of the biggest bottled drinking water measurement method to be implemented which
companies in Indonesia, runs its production line twenty appropriate with the company’s requirements.
four hours a day. Therefore, this company has to maintain Performance measurement is a management tool to
its machines in a good condition, by implementing measure the direction and speed of change done by the
maintenance activity (including preventive and corrective company. Performance measurement plays an important
maintenance). role for the improvement of a progress (change) towards a
Maintenance management is aimed at keeping the better place. Therefore, we need to formulate appropriate
production resources operated in their best performances. performance indicators. These indicators must be directly
Maintenance has a great importance in company’s linked with company’s strategic objectives [9].
profitability and is a factor that has an effect on In order to measure Engineering Department’s overall
company’s overall performance [13]. performance, we use Adapted Balanced Scorecard model
Maintenance activity is an activity that has a in maintenance performance measurement step. Adapted
significant contribution in operation costs, approximately Balanced Scorecard model is adoption of balanced
30 percent of operation costs, especially if the company is scorecard model that can be adjusted with the need of
implementing automated production system [7]. performance measurement in certain support department
Therefore, this activity must be planned in advance, [1].
including in planning maintenance personnel to be For this research, adapted balanced scorecard model
allocated in each production section. The number of taken has been adjusted to measure maintenance
maintenance personnel is affecting the effectiveness of performance. This model considers six performance
maintenance management, the improvement of perspectives, i.e.: financial, production, maintenance,
company’s productivity, and also towards the availability growth and innovation, environment, and costumers [1].
and reliability of company’s production system. But, before measure the maintenance performance,
Maintenance management activity must be done as we first must identify which maintenance section has the
effective and efficient as possible because it has a lowest relative efficiency among others. Maintenance

International Scholarly and Scientific Research & Innovation 3(10) 2009 1255 scholar.waset.org/1307-6892/4804
World Academy of Science, Engineering and Technology
International Journal of Industrial and Manufacturing Engineering
Vol:3, No:10, 2009

section that has the lowest efficiency will be the focus of The second step is the performance evaluation using
performance measurement, so we will know the value of adapted balanced scorecard model. From the section with
its actual performance and some recommendations can be the lowest relative efficiency, will be applied an Adapted
given to improve its performance. Balanced Scorecard model to asses the contribution of
The calculation of relative efficiency of each maintenance function to company’s overall performance.
maintenance section is done by using Data Envelopment This model is used to generate maintenance performance
Analysis method. Data Envelopment Analysis is a non indicators. Every indicator generated is validated by
parametric approach based on linier programming. This company’s top management. By using Analytic Hierarchy
method is used to calculate relative efficiency by Method, the weights of every indicator will be
weighting each input and output each Decision Making determined. Then, Objective Matrix will be used to asses
Unit (DMU) from the data. DMU is something that is actual performance of maintenance section analyzed
being calculated its efficiency. For this research, the compared to company’s target. Importance-performance
DMUs are maintenance section in production department matrix is used to determine indicators which have high
and other support department. Then, the result of this priority but sill indicate low performances.
calculation is used to determine the actual performance
value of department with lowest relative efficiency.
III. RESULTS
International Science Index, Industrial and Manufacturing Engineering Vol:3, No:10, 2009 waset.org/Publication/4804

II. METHODOLOGY
A. Determination of Maintenance Section with Lowest
This research is divided into two parts. First, we Relative Efficiency using Data Envelopment Analysis
determine which maintenance section has lowest relative There are three maintenance section analyzed in this
efficiency using Data Envelopment Analysis. Formulation research, i.e.: utility and husky sidel (HS), glass drinking
of Data Envelopment Analysis for this research is as water, and bottle drinking water. Calculations of relative
follows: efficiency every maintenance section is done by using
2

∑u o
Data Envelopment Analysis method and counted for
Max Eb = i ib every period (months). Data are taken for six month, input
i =1 for this model are numbers of maintenance crew, numbers
5

∑v
of supervisor, backlog hours, actual work hours, and
Subject to j x jb = 1 manpower utilization, and output data for this model are
j =1
work hours on time and percentage work hours on time.
2 5
In this case, these data are considered to be enough in
∑ ui yib − ∑ v j x jb ≤ 0 for b = 1, ... , n
i =1 j =1
analyzing the relative efficiency. The calculation results
are showed in Table 1.
u i ≥ 0 and v j ≥ 0 From Table 1, we can conclude that Utility and
Husky Sidel has the lowest average efficiency from the
With,
six months period compared to the other section. This
n = number of maintenance section under analysis
section will be the focus of our study, and we will
u1 = weight of output work hours on time measure the overall performance of this section.
u2 = weight of output percentage work hours on time TABLE I
v1 = weight of input maintenance crew number RELATIVE EFFICIENCY MEASUREMENT OF EACH MAINTENANCE
SECTION
v2 = weight of input supervisor number
Month Maintenance Section
v3 = weight of input actual work hours
Utility and
Glass Bottle
v 4 = weight of input backlog hours Husky Sidel
Jan 0.8480 1 1
v5 = weight of input manpower utilization
Feb 1 0.7870 1
o1b = output work hours on time for DMU-b Mar 1 1 1
Apr 1 1 1
o2b = output percentage work hours on time for DMU-b
May 1 1 1
x1b = input maintenance crew number for DMU-b June 0.8066 0.9297 1
Average
x 2b = input supervisor number for DMU-b Eff.
0.9424 0.9527 1.0000

x 3b = input actual work hours for DMU-b


x 4b = input backlog hours for DMU-b B. Maintenance Performance Measurement in Utility
and Husky Sidel Section
x 5b = input manpower utilization for DMU-b The first step in using adapted balanced scorecard
model is identification of company’s point of view,

International Scholarly and Scientific Research & Innovation 3(10) 2009 1256 scholar.waset.org/1307-6892/4804
World Academy of Science, Engineering and Technology
International Journal of Industrial and Manufacturing Engineering
Vol:3, No:10, 2009

mission, and strategy. This identification is very


important because the indicators to be generated must be
balanced with company’s strategy.
After identifying the company’s strategy, we will
generate some maintenance performance indicators based
on adapted balanced scorecard model. The indicators on
this research are maintenance performance indicators
(MPI). According to [22], MPI is a set of measurement
(metrics) that is used to measure maintenance
performance in a certain area or certain activity. MPIs
used are including seven adapted balanced scorecard
perspectives, but have to be adjusted with company’s
requirement and the availability of the data. All indicators
are quantitative one. The data is taken from records and
note available in the company, and also from management
interview, especially for financial data. Total MPIs in this
research, after being validated by the company’s top
International Science Index, Industrial and Manufacturing Engineering Vol:3, No:10, 2009 waset.org/Publication/4804

management, are 20 MPIs. MPIs in this research are Fig. 1. Hierarchy of Validated Maintenance Performance
shown in Table 2, and hierarchy of validated MPIs is Indicators
shown in Fig.1.
The next step is weighting each indicator. This step is
TABLE I done with the help of Super Decision 1.6.0 software. The
ADAPTED BALANCED SCORECARD MODEL MPI
value of each indicator’s weight is taken from
questionnaires filled by the top management. Perspective
Perspective Indicators
with the highest priority is consumer perspective. It means
Growth and Number of staff training that the maintenance activity must give high attention to
innovation Number of new ideas generated by staff the requirements and specification specified by the
Staff productivity rate
costumers.
From the maintenance performance measurement
Maintenance Schedule completion effectiveness done, we get the calculation of the company’s actual
Staff efficiency ratio performance in the period January to July 2008 is 4.4526.
Preventive maintenance efficiency ratio This means that the company’s performance shows
moderate performance. But it still needs some
Maintenance work efficiency
improvement so the company can reach better
Equipment uptime performance in the long term.
Backlog hours
IV. DISCUSSION
Production Availability
Performance The development process of balanced scorecard for
Quality maintenance function of the company is trying to translate
Overall Equipment Effectiveness (OEE) each of the company’s strategy into company’s objectives
and strategic measures adjusted with company’s point of
Planning Index
view and mission. A scorecard made should explain
Total Overall Equipment Effectiveness (TOEE) company’s strategy in maintenance activity through
Environment Number of work accident causal measures.
Costumers Costumer’s complain rate The need of balance of each different indicator will
result in short-term improvement, so that it can not be in
Work lateness rate
contradiction with the long-term improvement. The most
Financial Maintenance cost every period important thing is, that the causal relationship each
Return on investment (ROI) indicators in a balanced scorecard must be linked with
company’s financial objectives as the last goal.
The clear identification and the reached balance
between indicators can be seen in a causal relationship
diagram shown in fig. 2.

International Scholarly and Scientific Research & Innovation 3(10) 2009 1257 scholar.waset.org/1307-6892/4804
World Academy of Science, Engineering and Technology
International Journal of Industrial and Manufacturing Engineering
Vol:3, No:10, 2009

V. CONCLUSION

Using data envelopment analysis, we get Utility and


Husky Sidel Section as research object, because of its
lowest relative efficiency among other section in this
company.
From the maintenance evaluation, there are six
perspectives of adapted balanced scorecard model, with
costumers as the highest priority perspective, followed by
finance, production, innovation and growth, maintenance,
and environment. The maintenance function’s
performance is classified in moderate category, which
means the performance is rather good, but still needs
some improvements so that the company can get better
results in the future.
To analyze the indicators with high priority but low
International Science Index, Industrial and Manufacturing Engineering Vol:3, No:10, 2009 waset.org/Publication/4804

performance, we use importance-performance matrix. We


can conclude that there are three indicators in that
category: costumers’ complain rate, work lateness rate,
and Return on Investment. Some recommendations are
suggested to achieve better performance.

REFERENCES
Fig. 2. Cause Effect Relationship Between Indicators in
[1] I. Alsyouf, “Measuring Maintenance Performance Using A
Adapted Balanced Scorecard Model
Balanced Scorecard Approach,” Journal of Quality in Maintenance
Eng., vol.12 no 2 pp. 133-149. 2006.
To determine the critical maintenance indicator [2] S. Blumenberg, “Benchmarking Financial Processes with Data
(indicator with high priority but low performance), we use Envelopment Analysis,” International Journal of Quality and
importance-performance matrix. The importance Reliability Management.
[3] A. Charnes, et.al, “A Developmental Study of Data Envelopment
performance matrix of each indicator is shown in fig.3. Analysis in Measuring the Efficiency of Maintenance Units in The
Importance is represented by total priority weight. U.S. Air Forces,” Research Report CCS 460. Texas: Center for
Meanwhile, performance is represented by actual value of Cybernetic Studies University of Texas. 1984
[4] A.S. Corder, Maintenance Management Techniques, New York:
each indicator.
McGraw Hill Book Company, 1988.
From the importance performance matrix above, we [5] K. Dervitsiotis. 1981. Operational Managements. New York:
can conclude that there are three indicators in that McGraw Hill Book Company.
category, i.e.: costumers’ complain rate, work lateness [6] I.R Ferdian and R.N. Purwatoro. 2006. Pengukuran Kinerja Bank
Syariah: Integrasi Pendekatan DEA dengan Analisis Rasio
rate, and Return on Investment. Some recommendations Keuangan. Usahawan No. 10 Tahun XXXV.
are suggested to achieve better performance in the future [7] A. Garg, and S.G. Deshmukh. 2006. Maintenance management:
evaluation. literature review and directions. Journal of Quality in Maintenance
Engineering. Vol. 12 No. 3, 2006 pp. 205-238.
[8] V. Gasperz, 1998. Manajemen Produktivitas Total: Strategi
Peningkatan Produktivitas Bisnis Total. Jakarta: PT Gramedia
Pustaka Utama.
[9] V. Gasperz, 2003. Sistem Manajemen Kinerja Terintegrasi:
Balanced Scorecard dengan Six Sigma untuk Organisasi Bisnis
dan Pemerintah. Jakarta: PT Gramedia Pustaka Utama.
[10] K.S. Ghebrit, 2004. Productivity Measurement, Dissertation of
Pretoria University.
[11] K.M.A Al Harbi, 2000. Optimization of Staff Numbers in The
Process Industries: An Application of DEA. International Journal
of Manpower. Vol 21 no 1 pp 47-59.
[12] A. Parida, 2003. Development of Multi-criteria Hierarchical
Framework for Maintenance Performance Measurement:
Concepts, Issues and Challenges. Doctoral Thesis of Luleå
University of Technology.
[13] N.M. Paz and W. Leigh. 1993. Maintenance Scheduling: Issues,
Results, and Research Needs. International Journal of Operations
& Production Management. Vol. 14 No. 8, 1994, pp. 47-69.
[14] J. Riggs, J and G. Felix. 1983. Productivity Measurement by
Objectives. National Productivity Review.
Fig. 3. Importance Performance Matrix

International Scholarly and Scientific Research & Innovation 3(10) 2009 1258 scholar.waset.org/1307-6892/4804
World Academy of Science, Engineering and Technology
International Journal of Industrial and Manufacturing Engineering
Vol:3, No:10, 2009

[15] T.L. Saaty, 1994. The Analytic Hierarchy Process. New York:
McGraw Hill Company.
[16] R. Simons and A. Davila, 2000. Performance Measurement &
Control System for Implementing Strategy. New Jersey: Prentice
Hall.
[17] E. Siswadi and R.N. Purwatoro, Paradigma Baru Pengukuran
Efisiensi Kinerja Relatif Berbasis Pendekatan Matematik.
Usahawan No.6 Tahun XXXIV. 2005.
[18] Steering Committee for Review of Commonwealth/State Sevice
Provision. 1997. Data Envelopment Analysis: A Technique for
Measuring the Efficiency of Government Service Delivery.
Canberra: AGPS.
[19] D.J. Sumanth, 1984. Productivity Engineering and Management.
New York: McGraw Hill Book Company.
[20] Sutarman and W. Katon. 2003. Perencanaan Kebutuhan Dan
Pengadaan Material Pesawat Telepon Tipe Pte 991 N-3. Jurnal
Teknik Industri Vol 5 No.4 Universitas Pasundan.
[21] A.H.C. Tsang, “Measuring Maintenance Performance: A Holistic
Approach.” International Journal of Operations and Production
Management. Vol. 19 no 7 pp. 691-715. 1999.
[22] T. Wireman, Developing Performance Indicators for Managing
International Science Index, Industrial and Manufacturing Engineering Vol:3, No:10, 2009 waset.org/Publication/4804

Maintenance. New York: Industrial Press Inc., 2005.

International Scholarly and Scientific Research & Innovation 3(10) 2009 1259 scholar.waset.org/1307-6892/4804

You might also like